Ex-China HRC prices drop again amid slow local consumption, more discounted deals reported in Asia

Ex-China HRC prices have fallen again amid slow local consumption, while trade has been active with discounts in Asia.

Chinese HRC suppliers, who have been decreasing export prices since mid-February, have corrected their offers and deal prices are down once again this week amid the increasing pressure from the domestic market where demand shows no signs of recovery, while inventories remain high. Meanwhile, trade has been more active with new deals reported mainly from traders in short positions at lower levels.

Specifically, export offers for boron-added SS400 HRC from most large Chinese mills have settled at $545-560/mt FOB, with only a few offers still heard at $570/mt FOB, which means the midpoint has lost $15/mt week on week, falling to $557.5/mt FOB.

Meanwhile, the tradable level for ex-China materials has settled at $520-530/mt FOB, against $530-550/mt FOB at the beginning of last week. According to sources, traders have been more active, with around 100,000 mt of ex-China Q235/SS400 HRC reported to have been sold in Vietnam since last Friday until today, March 12, at $535-538/mt CFR for April-May shipment, while new offers and even a few small deals have already been heard at $530/mt CFR, down by $12-15/mt over the past week. Besides, more deals for ex-China Q195/SS400 HRC have also been reported in Pakistan at $550-553/mt CFR.

Ex-China SS400/Q195 HRC offers in Turkey have been voiced at $558-565/mt CFR, against $575-580/mt CFR last week. Besides, new offers from Chinese traders in the Middle East, the UAE in particular, have been heard at $560-565/mt CFR, against $570/mt CFR last week.

At the same time, average HRC prices in the Chinese domestic market have indicated big declines amid the contrast between supply and demand. In particular, domestic HRC prices in China have settled at RMB 3,890-3,970/mt ($548-559/mt) ex-warehouse on March 12, with the average price level RMB 113/mt ($16/mt) lower compared to that recorded on March 5, according to SteelOrbis’ data.

During the given week, import iron ore prices have seen big decreases, weakening the support for HRC prices from the cost side. At the same time, demand for HRC from downstream users has remained slack, while supply to the market has been sufficient, exerting a negative impact on prices. Meanwhile, inventory has been at relatively high levels, also negatively affecting HRC prices. However, demand has seen a gradual improvement, which will bolster the HRC market in the near future.

As of March 12, HRC futures at Shanghai Futures Exchange are standing at RMB 3,804/mt ($536/mt), decreasing by RMB 53/mt ($7.5/mt) or 1.4 percent since March 5, while up 0.16 percent compared to the previous trading day, March 11.

$1 = RMB 7.0963